Kansas City has a new fund targeting Midwest startups.
The Enterprise Center in Johnson County is leading a bi-state initiative that’s working to capitalize the $5 million Fountain Innovation Fund. The fund — built by the Midwest Seed Consortium — aims to increase the number and pace of scalable firms by investing in the most promising early-stage firms and offering them a clear conduit to success, ECJC wrote on its announcement of the fund. The consortium includes the Enterprise Center in Johnson County, the Economic Development Corporation of Kansas City, KCSourceLink, OneKC for Women Alliance, Ewing Marion Kauffman Foundation and the Greater Kansas City Chamber of Commerce.
“This fund will fill a critical gap in the ecosystem — between proof of concept grant funding and ideas ready for institutional funding like angel investment or venture capital,” said Melissa Roberts, ECJC vice president of communications and outreach. “Bridging this gap will allow us as a community to accelerate business growth and the resulting job creation with capital and wrap-around educational services. We need to fill the gap to ensure that Kansas City companies can bring their innovations to market quickly.”
The fund — known as an “evergreen” fund — taps tax-deductible donations to make its investments and reinvests the earnings back into its investment efforts. The fund borrows its approach from other successful models in Ohio, Massachusetts, and Wisconsin.
“This is how we position Kansas City, and the region, to compete in the changing economy,” ECJC wrote. “This approach creates a perpetual source of early-stage funding and an economic growth engine producing more scalable firms and quality jobs. … While creating opportunities for donors to catalyze innovation and create jobs, the fund strengthens the investment pipeline across the region. Investment returns go back to the fund to be reinvested creating evergreen sustainability over time.”
Once capitalized, the Fountain Innovation Fund will invest in six to 10 early-stage, Midwest companies each year with checks ranging from $50,000 to $100,000, according to ECJC. Maggie Kenefake will serve as managing director of the fund.
The fund aims to address a void in funding for Midwest startups, ECJC wrote.
“Kansas City, and the extended region, is falling behind peer cities in firm innovation, job growth, and other early-stage innovation metrics,” the organization said. “At the far end of the continuum, you have experienced and robust angel networks, and several new venture funds just beyond that. At the beginning of the continuum, you have active proof-of-concept programs identifying promising high-potential, newly formed companies. But, between those points, very little funding exists to support market validation and customer acquisition.”
In addition to the capital, portfolio firms will benefit from ECJC’s plethora of growth resources for startups and entrepreneurs, including training, mentoring and coworking space. The fund itself will be located at ECJC, allowing it to garner the expertise of its officemates, the Mid-America Angels and Women’s Capital Connection.